Journal of Monetary Economics 2019 DOI: 10.1016/j.jmoneco.2019.04.011 View full text
Barış Kaymak, Immo Schott

Abstract: The corporate tax code allows corporations to write off operating losses against past or future tax obligations, resulting in effective tax rates that are firm-specific and dependent on the history of the firm's performance. Since losses are partly an indication of a drop in productivity, which is generally persistent over time, firms with higher expected productivity face, on average, higher marginal taxes on their investment. In this paper, we analyze the distortionary effects of loss-offset provisions on in…

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